Sterling & Wilson - Well Set To Capitalise On Growing Opportunities, Anand Rathi Initiates With A 'Buy' Rating

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Anand Rathi Report

We initiate coverage on Sterling & Wilson Renewable Energy Ltd. with a Buy rating, at a 12-month target price of Rs 870 based on DCF, given the inspiring growth opportunities.

Globally, renewable energy capacity added in CY23 was a record 507 giga watt, up 50% YoY. The International Energy Agency estimates 3,178 GW are likely to be added over CY24-28. In India, capacity is likely to be 500GW by 2030 (versus 192GW at end -FY24), benefiting EPC companies.

Sterling & Wilson is a pure-play global solar engineering, procurement and construction and operation and maintenance service provider. We model solar EPC orders of ~Rs 496 billion over FY25-27 across markets.

RIL's plan to set up 100GW renewable energy capacity (predominantly solar and battery storage) by 2030 to meet its net-zero goal, could offer EPC opportunities of Rs 1.1 trillion over FY26-31, ~Rs 300 billion for Sterling & Wilson, and O&M services of ~Rs 24 billion.

Risks:

Adverse government policy, slower-than-expected project completion, keen competition dampening profitability

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